Analysys Mason perspective:
The A-to-Z of SaaS purchasing

Vendors of software-as-a-service (SaaS) solutions take complete responsibility for the software and cloud-based infrastructure, and their customer, such as communications service providers (CSPs), pay a regular fee for access. This makes SaaS drastically different from the traditional on-premises model of software delivery and consumption that involves CSPs managing infrastructure and dealing with inflexible hardware or software configurations. It is not just a new deployment option; it is also a new business model.

CSPs must weigh up the various costs and benefits of SaaS when considering how to deploy their business applications in support of their services. They must consider whether the various benefits of SaaS deployment outweigh the benefits of alternative deployments once all costs over time have been factored in.

CSPs have traditionally viewed SaaS as being advantageous than alternatives during the initial set-up period because the costs tend to be significantly smaller than that for either on-premises or hosted-cloud deployments. However, SaaS is typically perceived as being more expensive over the lifetime of the deployment due to the high recurring costs compared to the costs of on-premises and hosted-cloud deployments. This view may not necessarily reflect all the benefits of SaaS and may over-emphasise the lower software licensing costs of non-SaaS deployments and not taking operational and hardware costs into consideration. Care, therefore, should be taken to compare not just the licensing costs for various deployments, but also the costs associated with end-of-life upgrades, staffing and maintenance in order to understand the full range of cost savings that can be achieved by using a SaaS-based deployment.

It is important for CSPs to consider the suitability of SaaS for the specific service they are planning. In many scenarios, the long-term software costs associated with SaaS may become far less significant when CSPs take into account the significant savings that are possible in other areas.